Opinion
Inside the mysterious downfall of India’s Cox & Kings
The townhouse is partway down Mumbai’s seafront promenade. It’s typical of the decadent-but-decaying colonial buildings occupied by a few of the metropolis’s upper-class households, a renovation many years overdue. But the constructing, with its dim hallways and expansive, marble-floored rooms inside, occupies an enviable location. A couple of minutes’ stroll from the Gateway of India, it overlooks shoreline palm timber and sailboats on the Arabian Sea.
Urrshila Kerkar jokes that her household’s flat doesn’t appear to be the residence of somebody who has allegedly stolen a whole lot of hundreds of thousands of {dollars}. “I want we had all the cash everybody thought we had taken,” the 63-year-old says.
The townhouse is just steps away from the historic Taj Mahal Palace, India’s grandest lodge, which has hosted generations of European royalty and US presidents, and is the place the Kerkar household started to make its title and fortune 50 years in the past. Urrshila’s father, former Taj head Ajit Baburao Kerkar, after which she and her brother Peter, are credited by many with pioneering India’s fashionable journey business.
At the moment the household is battling to save lots of no matter repute it has left. Peter is accused of plundering Cox & Kings, the household’s firm, in an alleged fraud totalling a whole lot of hundreds of thousands of {dollars}. The flamboyant former chief govt is being held in a Mumbai jail infamous for housing gangsters and terrorists. Three separate Indian investigative companies are probing not less than 10 instances involving Cox & Kings and the Kerkars.
Based within the mid-18th century to produce British troops as they plundered the subcontinent, Cox & Kings stayed on after independence and, beneath the Kerkars’ dynastic stewardship, grew to become one in every of India’s main journey corporations. It embodied the glamour and extra that accompanied the rise of India’s new financial elite. At its peak in 2018, it had places of work in 27 nations from Japan to the US, and claimed to have seven million clients for companies that included overseas alternate and convention occasions, in addition to holidays and excursions.
But over the course of a number of years, hundreds of thousands of {dollars} disappeared from the corporate’s steadiness sheet. Its collectors are looking for almost $1bn and a Mumbai court docket final month ordered the corporate into liquidation. Investigators and lenders consider the true determine could possibly be a lot greater. A choose who rejected Kerkar’s bail software final 12 months referred to as the occasions at Cox & Kings an alleged “fraud of epic proportions” and mentioned it posed “a severe menace not solely to the monetary system of the nation, but additionally to the integrity and sovereignty of a nation”.
In a uncommon interview, over tea and rounds of vegetable sandwiches, Urrshila pleads poverty. The condominium’s partitions are naked and the household, as soon as enthusiastic patrons of the humanities, say work have been seized. Her ageing father sits principally silently alongside her. “You would name us dumb and dumber,” she says. “We’ve misplaced the whole lot.” She claims workers and lenders conspired to steal from the historic enterprise with out their information. “It was simply looted. There’s nothing left . . . They’ve not discovered even a single rupee with Peter or myself.
“What is gloomy is, had we taken the cash, I’d be completely happy to combat,” she continues. “Right here now we have to combat and we haven’t taken the bloody cash.”
Investigators have little time for the Kerkars’ protestations, with one officer saying that they “tried to offer us that bullshit additionally”. However because the officers work by way of the lists of allegedly faux clients and shell corporations, opaque facet offers and lacking hundreds of thousands, even they acknowledge that they’re but to unravel what led to the corporate’s precipitous fall. There’s additionally the open matter of how a lot of what allegedly occurred at Cox & Kings echoes the corruption that has plagued India’s monetary system. Saurabh Mukherjea, an investor and writer who has written about Cox & Kings, says the suspected fraud on the firm displays an “ingenuity [that] was very intriguing at many ranges.” Most intriguing now’s the query of how a lot the Kerkars knew and who was concerned.
The corporate that will come to be recognized as Cox & Kings was based in 1758 by Richard Cox, an assistant to the British Military’s commander-in-chief, to offer the whole lot from navy uniforms to banking companies for officers. It grew to become an essential cog in Britain’s imperial battle machine and was properly positioned to benefit from the colonial spoils in India, managing the funds and provides of regiments throughout the subcontinent.
After the ill-fated battle of 1857, when Indian troops rebelled unsuccessfully in opposition to the East India Firm, Cox helped transfer the loot seized within the reprisals and massacres to Britain. Diamonds, rubies and different “prizes” flowed by way of the Cox accounts of British officers stationed within the nation, in keeping with historian Nicholas Courtney, who has written an unpublished historical past of the group.
As Britain’s empire waned, Cox diversified into the whole lot from tobacco buying and selling to delivery items and travellers, whereas Lloyds purchased its banking arm in 1923. The corporate remained after India’s independence in 1947 as a small delivery home with a nascent tourism enterprise, in keeping with Courtney. Like many British multinationals, it got here beneath rising stress to promote itself to an Indian purchaser within the Seventies as prime minister Indira Gandhi sought to “Indianise” colonial establishments by forcing them into native possession.
Ajit Baburao Kerkar, a London-trained hotelier who ran the hospitality division of India’s largest conglomerate, the Tata Group, noticed a chance. Along with Anthony Good, a British PR govt who introduced manufacturers equivalent to Marks & Spencer to India, and different buyers, he acquired Cox & Kings round 1980, in keeping with Courtney’s manuscript. Ajit was a number one determine of India’s hospitality business, having opened Tata inns on Goan seashores and in desert palaces. The Taj Mahal Palace, a part of Tata’s holdings, was embellished with useful paintings picked out by his Swiss inside designer spouse, Elizabeth. Kerkar was “adept at discovering incredible places throughout the nation,” says Pavan Lall, an writer who writes about Indian tycoons.
Ajit’s relations with Tata patriarch Ratan in the end soured. The transaction with Cox & Kings particularly was dogged by controversy, with issues aired over whether or not it enabled the Kerkars to revenue from enterprise dealings with the Tata lodge chain that Ajit ran. A lawyer for the household rejected the allegations as “baseless” and “malicious”. In 1986, the elder Kerkar put in his 23-year-old son Peter to handle the corporate. It was Peter who would rework Cox & Kings.
Contemporary from an anthropology diploma at Stanford, Peter Kerkar’s first activity when he arrived at Cox & Kings’ London workplace was to fireplace most of its 50-odd workers. It was “probably the most troublesome factor I had ever executed”, he advised India’s Mint newspaper in 2013. Cox & Kings’ small journey enterprise, which principally took high-end British vacationers to India and elsewhere, had struggled since its takeover by the Kerkars.
Then got here the Nineties and India’s financial liberalisation. Financial growth and the emergence of a brand new middle-class provided unparalleled alternatives for businessmen as bold as Kerkar. Associates from the time bear in mind him as a enjoyable boss who led a tight-knit group of workers. Underneath him, Cox & Kings grew right into a sprawling journey conglomerate aspiring to rival different historic teams equivalent to Thomas Cook dinner.
Past carrying rich Europeans and People on worldwide excursions, Cox & Kings entered India’s nascent outbound journey sector, promoting packaged holidays that provided many Indians their first abroad journeys. It diversified into the whole lot from vacation financing to European funds inns and ran India’s luxurious Maharajas’ Specific prepare, tracing routes by way of historical websites in Rajasthan and Uttar Pradesh.
Revenues surged and, in a 2009 itemizing on India’s inventory alternate, the corporate raised Rs6.1bn ($130m), financing an abroad acquisition spree. Peter purchased corporations from the US to Australia, together with a deal of about £300m for British academic tour group Holidaybreak in 2011 that multiplied Cox & Kings’ debt about fivefold. In 2018, the corporate was valued at $1.2bn with 6,000 workers. A 3rd of its revenues got here from India, the remaining from its worldwide schooling and different companies.
Kerkar lived in London, cultivating a jetset picture of epicurean tastes. He was a eager socialiser and aesthete, patronising the Asian Music Circuit, a UK charity. His spouse Emma is the daughter of Sir Mark Tully, a famend BBC India correspondent. “On any given month, [Kerkar] would possibly begin the week in London and finish it in Melbourne, Australia, with visits to Mumbai and Singapore in between,” Cox & Kings’ in-house journey journal wrote in 2017, earlier than recounting his viewers with the Dalai Lama at a Himalayan glamping resort.
Kerkar resided in a white-fronted townhouse in Hampstead. He golfed at his cottage in Kerry, Eire, which he purchased after his assistant invited him on vacation there. “He was very hail-fellow-well-met,” says Sir Rocco Forte, proprietor of the eponymous luxurious lodge group the place Kerkar used to host cultural soirées. “You wouldn’t have a boring dinner sitting subsequent to him.”
The Hampstead mortgage was held by Cox & Kings. Individuals acquainted with the matter mentioned Kerkar, his spouse and kids had lived there. The corporate’s newest set of accounts earlier than it went bust lists an “funding property” with a price of £2.4m amongst its belongings.
Peter was the corporate’s public face however Urrshila, his older sister, ran operations in India. A graphic designer, she joined the corporate within the late Nineties to steer day-to-day operations. Peter “couldn’t deal with India”, Urrshila says. “I believed I’d assist him.”
Courtney, the historian who hung out with the Kerkars whereas researching his e book, says, “She was unimaginable. She can be wanting on the emails coming always. She’d be speaking to me and fairly often she’d have a phone name as properly.” He recollects attending a celebration that Peter was throwing for workers in Mumbai, whereas Urrshila stayed on the workplace. “I simply thought that it was Urrshila who was pulling on the strings.” Courtney claims his e book, commissioned for the corporate’s 250th anniversary in 2008, was by no means printed as a result of Urrshila objected that “‘I do all of the work and Peter will get all of the credit score.’”
In June 2019, a 20-year Cox & Kings veteran named Kailas Date obtained a midnight name. “‘Tomorrow, some information goes to come back that Cox & Kings has not paid some industrial paper. Don’t get hassled,’” Date recollects being advised. “‘You maintain your fort, you maintain your clients. Inform them issues can be all proper.’”
Earlier that 12 months Date, an govt within the firm’s company occasions division, had been handled to a visit to Amritsar, the northern Indian metropolis residence of the Sikh Golden Temple, after profitable an inner award. “The royal therapy was supplied to us. The decide up at Amritsar airport was in a BMW. The decide up from our homes in Mumbai to the airport was in Mercedes-Benz,” he says. “We got a dummy gold bar.”
However Date by no means obtained the bonus he mentioned he was promised. There was little transparency within the group’s funds and executives had begun to suspect one thing was amiss. Like many journey corporations, Cox & Kings operated on skinny margins, working its enterprise on money from buyer deposits for future holidays and paying off suppliers from inns to guides when full funds got here in. Its default on debt price Rs1.5bn got here lower than a 12 months after Cox & Kings bought off a piece of Holidaybreak, the 2011 acquisition, for about Rs44bn. The lack to repay regardless of displaying ample money on its steadiness sheets sparked inner panic that this was greater than a short-term funding squeeze.
Date and his group met with Urrshila, who assured them the scenario was short-term. Their salaries went unpaid for 3 months. “By mid-September, it was just a little completely different story. We have been advised ‘We’re going through an issue, we’re making an attempt to get well,’” he says. “We got here to know that that is getting out of hand.”
In London, Good, who had labored with Cox & Kings for greater than 40 years, and the administrators of the corporate’s UK subsidiary have been additionally struggling to entry funds to function the enterprise. “The father or mother firm was not responding to calls, in order that they have been questioning what the hell they need to do,” an adviser on the time says. Then, in November the corporate’s UK subsidiary was slapped with calls for from the State Financial institution of India and Sure Financial institution for reimbursement of loans price about £200m. The Indian father or mother had been admitted to India’s chapter court docket in October, prompting a domino impact as its subsidiaries additionally went into administration together with Cox & Kings UK.
The sale of the UK enterprise was fiercely resisted by Kerkar, in keeping with these with information of the administration. One concerned within the course of described it as a “automotive crash”, whereas one other claimed that Kerkar tried to intervene with the sale so as to maintain on to the Cox & Kings model. The UK subsidiary was finally purchased by the posh journey group Abercrombie & Kent. It paid solely £710,267, taking over the £10m price of fulfilling buyer holidays and extra creditor charges. Good, whose shares in keeping with somebody who knew him have been as soon as price about £10m, was left with nothing. He declined to remark for this story.
“Cox & Kings was an excessive case examine in coping with a troubled journey firm,” says David Pike, who oversaw the administration as a part of the restructuring group at KPMG.
One other UK-based company entity handed to the judicial insolvency service, Prometheon Enterprise, had £158m invested in seven different components of the Cox & Kings group, in keeping with the administrators’ accounts detailed within the directors’ report. However the directors, the US-headquartered Duff & Phelps, couldn’t discover any report of its shareholdings in these companies. There have been no share certificates on the firm’s workplace, nor did the corporate’s auditors or remaining workers know the place they have been. Letters despatched out to numerous events to determine the monetary state of Prometheon have been for probably the most half returned “because the tackle particulars held have been incorrect”, the report says.
Prometheon, which owed about £231m to its lenders together with Indian banks, had solely £1,900 in its checking account.
As investigators probed Cox & Kings, it appeared the 260-year-old firm’s fast collapse was the fruits of a years-long fraud. Police in India started summoning workers for questioning, together with Cox & Kings’ finance supervisor, Sagar Deshpande.
At some point in October 2020, they questioned him for 3 hours. He promised to return with extra paperwork. “Then he vanished,” one officer says.
Days later, Deshpande’s physique was discovered run over by a prepare on the tracks close to his parked automotive in a Mumbai suburb. His uncle advised native press on the time that his household suspected foul play. A 3-month investigation by the railway police decided it an unintentional dying, most likely suicide. Deshpande’s father declined to remark.
The police by no means bought the paperwork they have been promised however Deshpande’s dying solely darkened the thriller surrounding the corporate’s funds.
It’s unclear how the proceeds from the Holidaybreak sale, which Kerkar had mentioned in a TV interview can be used to pay debt, have been used, in keeping with a criticism by creditor Sure Financial institution referenced in Kerkar’s April bail order. India’s Enforcement Directorate, which probes financial crimes, alleges that Kerkar and a few firm executives used Cox & Kings and different entities to siphon greater than $500m, in keeping with the order. Many of those entities have been related to the corporate’s house owners or executives.
In a single case Rs11bn was allegedly lent by Cox & Kings to a failing industrial group, whose solely obvious connection to the journey firm was that its chief monetary officer gave the impression to be associated to Anil Khandelwal, Cox & Kings’ CFO on the time, in keeping with Kerkar’s bail order. Extra loans have been allegedly given by Cox & Kings to V Lodges, a struggling beachfront property purchased by Peter and Urrshila’s father, Ajit, in 2001. A lawyer for the household says Ajit Kerkar is “completely separate from Cox & Kings” and that transactions throughout the household have been “purely industrial”.
Between 2014 and 2019, about Rs260bn (greater than $3bn) was transferred between Cox & Kings and Ezeego, a web-based hotel-and-flight reserving platform owned by the Kerkar household, PwC present in a evaluation of the accounts on behalf of Cox & Kings’ collectors, regardless of the latter’s modest revenues. The size of the transfers prompted PwC to recommend the likelihood that Cox & Kings may need been utilized by somebody as “a conduit in arranging funds for Ezeego and/or . . . unknown final beneficiary(ies) can’t be excluded”. A lawyer for Kerkar responded that the report’s “credibility . . . is extremely uncertain”.
The Enforcement Directorate has alleged cash was siphoned from Ezeego to Redkite, a monetary firm owned by the households of Cox & Kings’ Khandelwal and inner auditor Naresh Jain, in keeping with Kerkar’s bail order. Khandelwal and Jain, who’ve each been arrested, couldn’t be reached for remark. Their legal professionals have beforehand argued that Kerkar was liable for the suspected offences.
Earlier than his arrest, Peter advised Indian web site Newsclick that Cox & Kings executives have been siphoning cash with out his information. “I could also be silly,” he mentioned, “however I’m not a legal.” The Enforcement Directorate mentioned, nevertheless, it considers Kerkar the “mastermind” with accusations in opposition to others made with the “ulterior motive to flee himself”. A lawyer for Kerkar referred to as this “a baseless allegation” with “no proof . . . besides rumour”.
Kerkar’s upper-crust appeal, Cox & Kings’ storied legacy and the mouth-watering progress alternatives meant “inventive accounting tips and questionable company governance practices [were] ignored by each lenders and fairness buyers,” in keeping with Mukherjea’s e book, Diamonds within the Mud. A number of have since been caught up within the fallout.
One instance was SSG, an Asia-focused fund arrange by former Lehman Brothers executives, now owned by the US-based asset supervisor Ares. SSG constructed a portfolio that included investments in Cox & Kings and Holidaybreak, whereas the Pandora Papers leak of offshore entities confirmed that Peter Kerkar and SSG founder Shyam Maheshwari arrange a number of offshore corporations, in keeping with the Indian Specific newspaper. Maheshwari’s household has additionally beforehand held shares in Redkite.
After SSG demanded reimbursement on money owed within the UK, Kerkar sought to dam it, alleging that Maheshwari, who has since left SSG, conspired to steal his belongings. However an English Excessive Court docket choose final month dismissed Kerkar’s “far-reaching however obscure” allegations, citing “no proof”. Mumbai police have additionally referred to as Kerkar’s allegations in opposition to SSG and others “false and frivolous”.
Ares SSG mentioned these findings “vindicate our place that Kerkar’s allegations in opposition to SSG are false”, including it “will proceed to pursue enforcement and restoration of its funds from Kerkar”. It mentioned Maheshwari left SSG to spend extra time together with his household and pursue different pursuits, and has mentioned any offshore entities have been for respectable enterprise functions.
In late 2020, Peter Kerkar was summoned to an Enforcement Directorate workplace in Mumbai for questioning. He was arrested and is being held within the metropolis’s Arthur Highway jail. The Hampstead residence has been reclaimed by the State Financial institution of India.
One 12 months after leaving his job on the bankrupt Cox & Kings, one in every of its former ticketing officers Keshav Rane was promoting fish. Rane had been incomes about Rs50,000 ($674) a month, a good middle-class wage, earlier than the corporate’s collapse. Now he was flogging kingfish and crabs in Mumbai, nonetheless owed months of again wages. “My buddies have been actually giving me extra money than what I used to be charging for the fish, simply to assist me,” he says. “I have to survive.”
What occurred to the cash that was allegedly siphoned from Cox & Kings, in occasions that left hundreds of workers jobless and holidaymakers stranded, continues to be a thriller. However it’s emblematic of a sample of fraud repeated with alarming regularity throughout Indian business. The cash misplaced could by no means return to India, burdening banks with unhealthy money owed. Analysts say that at a nationwide degree this may weigh on progress for years. “This can be a tip of [the] iceberg on this ocean of cash laundering, which can sink the complete monetary system,” the choose at Kerkar’s bail listening to mentioned.
Prime Minister Narendra Modi’s efforts to scrub up India’s company and monetary system have had restricted success. A chapter code allowed collectors to begin recovering their money owed, however courts and police stay overburdened. There are “widespread denominators” working by way of these scams, says Lall, the writer. “There’s all the time a global angle. At all times a layer of shell corporations. At all times an enormous actual property angle to it.”
Peter Kerkar has been in jail for greater than a 12 months and denied bail. His authorized group are attempting to get him out, whereas the police proceed following the cash path. As they do, instances have piled up in opposition to the tycoon. Urrshila says he has had a number of bypass surgical procedures and is in danger, although the choose determined he was receiving sufficient medical consideration in jail. The household continues to protest its innocence.
At a convention in 2016, Urrshila assessed Cox & Kings’ previous and future. “We’ve gone by way of a few world wars, we’ve gone by way of the commercial revolution, and now, I collect, digitisation,” she mentioned on the time. “We’ll most likely be there for digital actuality . . . after which I is probably not round. However I’m positive C&Ok can be.”
Benjamin Parkin is the FT’s South Asia correspondent. Alice Hancock is the FT’s leisure industries reporter. Further reporting by Andrea Rodrigues in Mumbai
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